Turkey: Non-Liability Agreements

Last Updated: 25 April 2018
Article by Yeliz Esmersoy and Melis Yazici

The Definition and The Purpose Of Non-Liability Agreements

Non-liability agreement is an agreement established prior to the breach of contract and tort damages with consentaneously and bilateral declaration of intent of debtor and creditor. A non-liability agreement is a contract in which a party agrees to waive the right to seek compensation or take legal action in the event of a harmful event.

In other words, non-liability agreements are legal transactions that provide non-liability to parties partially or completely in case of a breach of contract at a future date. Also these agreement have the characteristics of act of disposal for the creditor and acquisitive transaction for the debtor. The aim of the parties is to limit the liability and avoid any future claims for indemnity.

The Establishment of Non-Liability Agreement

In order to establish an agreement of non-liability, it is necessary to have bilateral common intent of the Parties. The declaration of intent may be explicit or implicit. Non-liability agreements may be made either as an independent contract or as a clause.

In practice, non-liability agreement made by adding a provision to the existing contract is more common. Also it is crucial to state that, if there is a form prescribed by law for actual debt relationship, then the non-liability agreement must be made in the same way. If such a form is not prescribed, it is possible to make the agreement as desired. It may be signed as a separate contract, after the contract or at the same time of the main contract because it is an agreement that limits the liability in advance. In addition, in the event of the amount of liability is limited in contracts, the non-liability agreement is established.

The validity of these provisions will be evaluated within the framework of the provisions of Turkish Commercial Code ("Law") Articles 115,116 and 221.

The Limitations and Nullity of Non-Liability Agreement:

In accordance with the principal of freedom of contracts, parties can make contracts about every subject unless the terms of which are impossible, unlawful or immoral or in contrary to public order or fundamental human rights. From this point of view, parties have a right to determine the terms and conditions of the non-liability agreement freely. Articles 115,116 and 221 of Turkish Code of Obligations Numbered 6098 contains mandatory rules for non-liability agreements. Non-liability agreements in contradiction to these provisions will be null and void.

Provisions of Article 115, 116 and 221 of the Turkish Code of Obligations are as follows;

ARTICLE 115- Previous agreements to the effect that the debtor shall not be liable for gross negligence shall be null and void.

All kinds of agreements made previously indicating that the debtor shall not be liable for any debts that extending from the employment contract signed between the debtor and creditor shall be strictly null and void.

A prior agreement on a service, profession or art requiring specialization can only be carried out with the permission given by law or authorized departments indicating that the debtor shall not be liable for slight negligence shall be strictly null and void.

ARTICLE 116- Even if the debtor has assigned the fulfilment or the debt or the use of the right extending from the debt relationship to a person who lives with him or his assistants like his employees, the debtor shall be liable for compensating the losses given to other party during execution of the work by them.

Liability extending from the actions of the persons under management of debtor may be excluded completely or partially with a previously signed agreement.

A prior agreement on a service, profession or art requiring specialization can only be carried out with the permission given by law or authorized departments indicating that the debtor shall not be liable for slight negligence shall be strictly null and void.

ARTICLE 221- If the seller commits a gross neglience in selling the product in a defective state, then any kind of agreements limiting or removing the seller's liability are null and void.

The non-liability agreements are valid unless such agreements provide non -liability for;

  • gross negligence  (including willful misconduct)
  • service, profession or craft requiring expertise,

Then it is not possible to revoke the liabilities arising from the agreement by non-liability agreement.

The Limitations on The Provisions of Article 115 of Turkish Code of Obligations:

In case of gross negligence, without any necessity for any action to be taken, the debtor will be liable for his breach.

In general, non-liability agreements are made as a clause which indicates that the debtor is not liable for any of his negligence. In that case, the parts related to gross negligence will automatically be null and void, the debtor shall be liable for his acts with gross negligence, the debtor shall not be liable for the breach of contract only if there is slight negligence.

All kinds of agreements made indicating that the debtor shall not be liable for any arising from the employment contract signed between the debtor and creditor are null and void.

If a service, profession or craft requiring expertise can only be   provided with the concession provided by laws or authorized departments, previous agreements indicating that the debtor shall not be liable for slight negligence are strictly null and void.

The Limitations provided by Article 116 of Turkish Code of Obligations:

According to the Article 116 of Turkish Code of Obligations, debtor shall be liable for compensating the losses given to other party during execution of the work under debtor's management and the liability arising from the acts of such persons can be excluded.

In this article, unlike Article 115 of Turkish Code of Obligations, no distinction has been made about the degree of negligence for validity of non-liability agreements.

For this reason, it is possible to make a non-liability agreement even for gross negligence of persons under management of debtor. However, if a service, profession or craft requiring expertise can only be provided with the concession provided by laws or authorities, previous agreements indicating that the debtor shall not be liable for slight negligence of the persons under his management are strictly null and void.

In the contracts, as a strong reminder of the first part of the relevant article, parties usually emphasize that the parties are liable for the actions of persons under their management.

The Limitations on The Provisions of Article 221 of Turkish Code of Obligations:

According to the Article 221 of Law " If the seller commits a gross negligence in selling the product in a defective state, then any kind of agreements limiting or removing the seller's liability are null and void." In cases that the seller acts with gross negligence or willful misconduct, it is not possible to be immune from liability based on non-liability agreement.

The Effect of Nullity on the Contract:

It has been stated that non-liability agreements, which can be made as a provision of the main contract or as a separate contract, will be null and void if they do not comply with the limitations set forth in the Code of Obligations.

In case of nullity, contracts shall be null and void as from the time when the transaction has been made.

If such provision of the contract becomes null and void, the remaining provisions of this contract shall not be affected by this nullity and shall continue to be valid, legal, and enforceable. However the contract is deemed as completely null and void if there is reason to assume that it would not have been concluded without the said terms considered void.

In conclusion, an agreement made to the effect that the debtor shall not be liable for gross negligence shall be strictly null and void. If an event which causes damage, occurs as a result of slight negligence of the debtor, the non-liability agreement will be valid. However, the degree of negligence will be determined by the court in every case.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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